HOME-FLIPPING OPPORTUNITIES MAY BE FALLING, STUDY FINDS

Nearly two out of three real estate investors in California who work with a Realtor plan to buy and hold homes for more than a year instead of flipping them for quick profits, a recent survey from the California Association of Realtors shows.

That stat suggests a general shift in industry strategy. When foreclosures flooded the market and home prices plummeted, investors picked up heavily discounted properties, renovated them and executed quick sales.

Now? Not so much.

Distressed sales have dried up and housing prices have soared, rendering flipping less financially viable.

Chief Denney, developer and owner of Chief Property Ventures in Rancho Santa Fe, does both flipping, and buying and holding. But the company has been doing more of the latter since three months ago, when it saw fewer flipping opportunities.

“It’s been really difficult finding deals with the spread needed in order for us to succeed at doing renovations,” said Denney, whose company is featured on A&E’s new show “Flipping San Diego.”

“The real estate market, what I like about it is it’s never the same. You figure out how to stay profitable and you continue to play the game,” he said.

What’s changed?

Foreclosures and mortgage defaults have fallen to their lowest levels since 2006, and the county’s home prices have risen to a 5½-year high. Also, short sales — deals that let borrowers sell their homes for less than what they owe — have become easier to accomplish, Denney said. When you put all those factors together, fewer foreclosures come onto the market.

And that means fewer deals for real estate investors. But that’s not to say they’ve all left the market.

Nearly 30 percent of San Diego County home sales in June were completed by absentee buyers, likely investors or second-home buyers, show figures from real estate tracker DataQuick. The share of absentee buyers peaked at 31.5 percent in March.

“It’s probably the most competitive that I’ve ever seen it in San Diego,” Denney said. “It’s still a lucrative business, but you have to have an amazing team to put out an incredible project. And you’ve got to know what you’re doing. The days of not knowing much and making a lot of money are kind of over.”

It seems interest in real estate has remained high, but strategies appear to be shifting.

Sixty-four percent of investors who teamed up with a Realtor said they plan to keep the property for more than a year, says the Realtors’ survey, which was conducted in April and recently released.

The rest? They plan to flip within 12 months.

What hasn’t changed: Flipping can be high-risk work that comes with unforeseen challenges, Denney said.

In one episode of “Flipping San Diego,” which debuted earlier this month, his company had to tear down half of a home’s front because of structural issues that revealed themselves only after crews tore open walls.

The show chronicles renovation projects completed by Denney’s company from start to finish. Episodes feature Denney, and partners Chris Bedgood and Elisa Stabile. They air every Saturday at noon local time.